Why is AIM so terrible at recognising potential, let alone putting a realistic value on it – even as it is crystallising? A case in point: Seeing Machines Ltd (AIM:SEE, OTC:SEEMF) (up 7% this week). Okay, the company, a specialist in eye-tracking, has been around for a decade or more. However, in the past two years, its technology, which monitors driver attention, has really gained traction with the automotive industry.
So much so, that we learned this week it is now installed in more than 2.2 million vehicles. Its nearest competitor, the Swedish firm Smart Eye, still hasn’t reached the 2 million milestone, yet is valued at a 40% premium to Seeing Machines.
And don’t get me started on the valuation this business might have if it were based in Silicon Valley – suffice it to say, it wouldn’t be £205 million.
Anyway, rant over. Here’s some rational analysis from the American investment bank Stifel. It also thinks the business is undervalued for a market leader that, over the next three years, is expected to grow its revenues at a compound annual rate of 27%. Its 13p price target implies a valuation of over £500 million.
Roller coaster ride
Turning to the wider market, it has been a roller coaster ride for global stock exchanges as US recession fears prompted a global sell-off that has slowly been unwound. The AIM All-Share fell 0.6% over the week to 766.48, while the FTSE 100 looks set to end a tumultuous five days as it started.
Near the top of the losers’ pile was Orchard Funding Group, which dropped 32% after it revealed that its largest customer had gone into administration. Orchard, which provides insurance premium finance, had lent around 80,000 customers of Nukula Ltd, which traded under the Insure That brand, a total of £16.7 million as of the end of June – that’s around a quarter of its loan book.
The week’s biggest faller, LungLife (down 50%), offered no obvious news for its demise.
Funding complete
UK Oil & Gas PLC (AIM:UKOG) dropped 21% after it completed a £1.25 million fundraiser that will help bankroll the group’s ambitions in hydrogen storage. It took advantage of a strong share price, which is up around 200% in the last month.
Among the risers, Shield Therapeutics PLC (AIM:STX, OTCQX:SHIEF) was up 32%, with the stock doubling in value over the last four trading weeks. This comes on the back of some unexpectedly strong US prescription data for its anaemia product.
Oncimmune Holdings PLC (AIM:ONC)was one of Friday’s big risers and will end the week firmly in the green with a 24% rise. This was on the back of winning a $1.5 million contract that puts it firmly on the path to profitability next year.
Some opportunistic buying ahead of de-listing on August 15 pushed shares of Chaarat Gold Holdings Ltd (AIM:CGH) 82% higher.
Stock in the data sciences specialist Jaywing PLC (AIM:JWNG) (up 49%) continued to rise despite last week’s statement that it didn’t know why its shares were climbing.
For the 'watch list'
Okay, here’s one for the watchlist: Graft Polymer (UK) PLC (LSE:GPL). The last month has seen the share price double as a quiet transformation has really started to gain traction with investors. Under new chief executive Anthony Tennyson, it has made some bold moves, including reversing out of specialty chemicals and manufacturing to focus on its Graft Bio business.
This part of the slimmed-down business focuses on coatings that enhance or change the bioavailability of a drug, which in plain language means they can target where in the body a treatment is released. This may be helpful if you don’t want your payload to be absorbed by the liver, for example.
Anyway, I digress. Graft has taken its interest in drug development a step further by teaming up with Awakn Life Sciences, which is working on a treatment for trauma disorders such as PTSD, as well as depression and addiction.
Awakn’s chief medical officer is David Nutt, the Imperial College professor who is also one of the world's leaders in neuropsychopharmacology. Strap in, it will be interesting to see where this collaboration goes.